Exhibit 10.1
LEASE AGREEMENT
BETWEEN
WHMNY REAL ESTATE LIMITED
PARTNERSHIP,
AS LANDLORD, AND
EARTHLINK, INC.,
AS TENANT
DATED SEPTEMBER 19,
2005
PASADENA,
CALIFORNIA
TABLE OF
CONTENTS
LIST OF DEFINED
TERMS
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Additional Rent
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Affiliate
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Base Tax Year
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Basic Lease Information
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Basic Rent
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Building
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Building’s
Structure
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Building’s Systems
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Casualty
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Commencement Date
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Complex
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Damage Notice
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Default Rate
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Event of Default
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Expense Stop
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GAAP
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Generator Space
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Hazardous Materials
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including
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Initial Liability Insurance
Amount
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Land
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Landlord
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Landlord’s
Mortgagee
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Law
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Laws
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Lease
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Letter of Credit
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Loss
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Mortgage
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Operating Costs
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Operating Costs and Tax
Statement
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Parking Area
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Permitted Transfer
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Permitted Transferee
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Permitted Use
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Premises
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Prevailing Rental Rate
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Primary Lease
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Prior Lease
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Project
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Rent
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Repair Period
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Taking
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Tangible Net Worth
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Taxes
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Telecommunications
Services
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Tenant
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Tenant Party
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Tenant’s Off-Premises
Equipment
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Tenant’s Proportionate
Share
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Term
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Transfer
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LEASE
This Lease Agreement (this “
Lease ”) is entered into as of
September 19, 2005, between WHMNY REAL ESTATE LIMITED
PARTNERSHIP, a Delaware limited partnership ( “
Landlord ” ), and EARTHLINK, INC., a
Delaware corporation ( “ Tenant ”
).
1.
Definitions and Basic Provisions
. The definitions and basic provisions set forth
in the Basic Lease Information (the “ Basic Lease
Information ” ) executed by Landlord and Tenant
contemporaneously herewith are incorporated herein by reference for
all purposes. Additionally, the following terms shall have
the following meanings when used in this Lease: “
Affiliate ” means any person or entity which,
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with the
party in question; “ Building’s Structure
” means the Building’s exterior walls, roof,
elevator shafts, footings, foundations, structural portions of
load-bearing walls, structural floors and subfloors, and structural
columns and beams; “ Building’s Systems
” means the Building’s base building HVAC,
life-safety, plumbing, electrical, elevator and mechanical systems,
but excludes those portions of such systems which were installed by
Tenant or specifically for Tenant; “ including
” means including, without limitation; “
Laws ” means all federal, state, and local laws,
ordinances, rules and regulations, all court orders, governmental
directives, and governmental orders and all interpretations of the
foregoing, and all restrictive covenants affecting the Project, and
“ Law ” means any of the foregoing;
“ Generator Space ” means the separate
structure housing the electrical generators for the Building, it
being acknowledged that all of the provisions of this Lease
applicable to the Premises shall be applicable to the Generator
Space except as otherwise provided herein; “
Tenant’s Off-Premises Equipment ” means any
of Tenant’s equipment or other property that may be located
on or about the Project (other than inside the Premises) including
the generators, chiller, UPS system, electrical switch, batteries
and control systems located in the Generator Space, and all related
improvements connecting said equipment to the Building; and
“ Tenant Party ” means any of the
following persons: Tenant; any assignees claiming by, through, or
under Tenant; any subtenants claiming by, through, or under Tenant;
and any of their respective agents, contractors, employees,
licensees, guests and invitees.
2.
Lease Grant . Subject to the terms of this Lease, Landlord
leases to Tenant, and Tenant leases from Landlord, the
Premises.
3.
Tender of Possession
. Tenant is currently in possession of the
Premises pursuant to that certain lease dated September 26,
1996, between Landlord’s predecessor in interest and Tenant,
as amended (the “ Prior Lease ” ).
As the existing tenant of the Premises, Tenant shall be
deemed to have accepted the Premises in their existing
“AS-IS” condition as of the Commencement Date
except as otherwise provided in Exhibit D attached hereto and
Tenant acknowledges that the Premises are suitable for the
Permitted Use. From and after the Commencement Date,
Tenant’s continued occupancy of the Premises shall be
governed by the terms of this Lease. As of the date hereof,
neither Landlord nor Tenant has, to its knowledge, any claims,
counterclaims, set-offs or defenses against the other arising out
of the Prior Lease or in any way relating thereto or arising out of
any other transaction between Landlord and Tenant. Landlord
and Tenant further agree that effective as of the Commencement
Date, the Prior Lease shall be deemed terminated and neither
Landlord nor Tenant shall have any further rights or obligations to
the other accruing under the Prior Lease after the Commencement
Date, but all obligations under the Prior Lease accruing prior to
the Commencement Date shall survive the termination of the Prior
Lease, including reconciliation of Operating Costs and Taxes for
the period January 1, 2005 through June 30, 2005, which
reconciliation shall be performed in accordance with the terms of
the Prior Lease.
4.
Rent .
(a)
Payment . Tenant
shall timely pay to Landlord Rent, without notice, demand,
deduction or set off (except as otherwise expressly provided
herein), by good and sufficient check drawn on a national banking
association at Landlord’s address provided for in this Lease
or as otherwise specified by Landlord and shall be accompanied by
all applicable state and local sales or use taxes. Basic
Rent, adjusted as herein provided, shall be payable monthly in
advance. Basic Rent shall be payable on the first day of each
month in accordance with the Basic Rent schedule set forth in
the Basic Lease Information. Payments of Basic Rent for any
fractional calendar month at the end of the Term shall equal the
product of 1/365 of the annual Basic Rent in effect during the
partial
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month and the number of days in the
partial month and shall be due on the first day of such month.
Tenant shall pay Additional Rent at the same time and in the
same manner as Basic Rent.
(b)
Operating Costs; Taxes
. Commencing January 1, 2007, Tenant shall pay to
Landlord the amount (per each rentable square foot in the Premises)
( “ Additional Rent ” ) by which the
annual Operating Costs (defined below) per rentable square foot in
the Building exceed the Expense Stop (per rentable square foot in
the Building). Landlord may make a good faith estimate of the
Additional Rent to be due by Tenant for any calendar year or part
thereof during the Term. During each calendar year or partial
calendar year of the Term (after the base year, if the Expense Stop
is calculated on a base year basis), Tenant shall pay to Landlord,
in advance concurrently with each monthly installment of Basic
Rent, an amount equal to the estimated Additional Rent for such
calendar year or part thereof divided by the number of months
therein. From time to time, Landlord may estimate and
re-estimate the Additional Rent to be due by Tenant and deliver a
copy of the estimate or re-estimate to Tenant, but Landlord may
re-estimate Additional Rent no more than once in any calendar year.
Thereafter, the monthly installments of Additional Rent
payable by Tenant shall be appropriately adjusted in accordance
with the estimations so that, by the end of the calendar year in
question, Tenant shall have paid all of the Additional Rent as
estimated by Landlord. Any amounts paid based on such an
estimate shall be subject to adjustment as herein provided when
actual Operating Costs are available for each calendar
year.
(1)
The term “ Operating Costs ” means all
expenses and disbursements (subject to the limitations set forth
below) that Landlord incurs in connection with the ownership,
operation, and maintenance of the Project, determined in accordance
with customary real estate industry accounting practices
consistently applied, including the following costs: (A) wages
and salaries of all on-site employees at or below the grade of
building manager or its equivalent engaged in the operation or
maintenance of the Project (together with Landlord’s
reasonable allocation of expenses of off-site employees at or below
the grade of building manager or its equivalent to the extent such
off-site employees perform services in connection with the
operation or maintenance of the Project), including taxes,
insurance and benefits relating thereto; (B) all supplies and
materials used in the operation, maintenance, repair, and
replacement of the Project; (C) costs for improvements made to
the Project which, although capital in nature, are expected to
reduce the normal operating costs (including all utility costs) of
the Project, as amortized using the interest rate then announced by
Bank of America or, if Bank of America ceases to exist or ceases to
publish such rate, the rate then announced by the largest (as
measured by deposits) chartered bank operating in California, as
its “prime rate” or “reference rate” over
the time period reasonably estimated by Landlord to recover the
costs thereof and limited to the estimated savings in Operating
Costs, as well as capital improvements made in order to comply with
any Law hereafter promulgated by any governmental authority or any
interpretation hereafter rendered with respect to any existing Law,
as amortized using the interest rate then announced by Bank of
America or, if Bank of America ceases to exist or ceases to publish
such rate, the rate then announced by the largest (as measured by
deposits) chartered bank operating in California, as its
“prime rate” or “reference rate” over the
useful economic life of such improvements as determined in
accordance with customary real estate industry accounting practices
consistently applied; (D) insurance expenses;
(E) repairs, replacements, and general maintenance of the
Project; and (F) service, maintenance and management contracts
with independent contractors for the operation, maintenance,
management, repair or replacement of the Project. If the
Building is part of a multi-building office complex (the “
Complex ” ). Operating Costs and
Taxes for the Complex may be equitably prorated among the Project
and the other buildings of the Complex, as reasonably determined by
Landlord.
For purposes of this Lease,
Operating Costs shall not include the following:
a.
Costs of repair or replacement, in
excess of commercially reasonable deductibles, incurred by reason
of fire or other casualty that are covered or should have been
covered by insurance had Landlord complied with the insurance
requirements imposed upon Landlord under the terms of this Lease,
or exercise of the right of eminent domain.
b.
Leasing commissions, advertising and
other promotional costs and expenses, attorneys’ fees, costs
and disbursements and other expenses incurred in negotiating or
executing leases or in resolving disputes with other tenants, other
occupants, or other prospective tenants or occupants of the
Building or any portion
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thereof, collecting rents or
otherwise enforcing leases of other tenants of the Building or any
portion thereof.
c.
Any capital improvement items except
as set forth in Section 4(b)(l)(C) above.
d.
Depreciation and amortization of
loans.
e.
Costs and expenses incurred by
Landlord for which Landlord is actually reimbursed by parties other
than tenants of the Building, including, without limitation,
insurance proceeds.
f.
Costs and expenses attributable to
the correction of any construction defects in the initial
construction of the Building.
g.
Finance and debt service costs for
the Building or any portion thereof and rental under any ground
lease or leases for the Building or any portion thereof.
h.
Landlord’s general overhead
except as it relates to the operation, management, maintenance and
repair of the Building.
i.
Costs and expenses for items and
services for which Tenant reimburses Landlord or pays third
persons, to the extent of such reimbursement or payment.
j.
Costs, fines or penalties incurred
due to violations by Landlord of any governmental rule or
authority, other than any such cost, fine or penalty (not otherwise
paid by Tenant) incurred due to any violation caused by any act or
omission of Tenant, its employees or agents.
k.
Costs of management fees (including
reimbursables and other related costs) to the extent they exceed
comparable fees incurred in comparable office buildings in the
area.
1.
Costs of wages, salaries, or other
compensation paid to any executive employees of Landlord above the
grade of “Project Manager” or paid to employees of
Landlord who are not employed full time, on site at the Building;
provided, however, if an employee of Landlord works on several
buildings, including the Building, the costs and expenses incurred
in connection with such employee shall be equitably allocated among
such buildings by Landlord in accordance with reasonable and
consistent criteria.
m.
Costs and expenses incurred in
leasing air conditioning systems, elevators or other equipment
ordinarily considered to be of a capital nature.
n.
Costs and expenses for the removal
or encapsulation of asbestos or other hazardous or toxic substances
brought into the Building by Landlord in violation of
Laws.
o.
Any expenses for repairs or
maintenance which are covered by warranties and service contracts,
to the extent such maintenance and repairs are made at no cost to
Landlord.
p.
Any costs representing any amount
paid for services and materials (including overhead and profit
increments) to a related person, firm, or entity to the extent such
amount exceeds the amount that would be paid for such services or
materials at the then existing market rates to an unrelated person,
firm or entity.
q.
If any taxes paid by Landlord and
previously included in Operating Costs are refunded, Landlord shall
promptly pay Tenant an amount equal to the amount of such refund
(less the reasonable expenses incurred by Landlord in obtaining
such refund) multiplied by Tenant’s share in effect for the
period to which such refund relates.
r.
The cost of overtime or other
expenses incurred by Landlord in curing its defaults.
3
s.
Any amounts payable by Landlord
which constitutes a fine or penalty, including interest or
penalties for any late payment.
t.
Repairs, alterations, and
general maintenance paid by proceeds of insurance and repairs
necessitated by Landlord’s violations of law in effect as of
the date of this Lease.
u.
Repairs, alterations, and general
maintenance necessitated by the gross negligence or willful
misconduct of Landlord or its agents, employees, or
contractors.
v.
Taxes which are not properly
allocable to the site on which the Building is located.
w.
Any expenses, costs or accruals
related to portions of the Complex other than the Building, except
to the extent such expenses costs or accruals are properly
allocated to the Building.
x.
Charitable contributions of
Landlord.
y.
Any other expense which under
customary real estate industry accounting practices consistently
applied would not be considered to be a normal Operating
Cost.
z.
If the Expense Stop is calculated on
a base year basis, Operating Costs for the base year only shall not
include market-wide labor-rate increases due to extraordinary
circumstances, including boycotts and strikes; utility rate
increases due to extraordinary circumstances, including
conservation surcharges, boycotts, embargos or other shortages; or
amortized costs relating to capital improvements.
(2)
Commencing January 1, 2007,
Tenant shall also pay Tenant’s Proportionate Share of any
increase in Taxes for each year and partial year falling within the
Term over the Taxes for the Base Tax Year. Tenant shall pay
Tenant’s Proportionate Share of Taxes in the same manner as
provided above for Tenant’s Proportionate Share of Operating
Costs. “ Taxes ” means taxes,
assessments, and governmental charges or fees whether federal,
state, county or municipal, and whether they be by taxing districts
or authorities presently taxing or by others, subsequently created
or otherwise, and any other taxes and assessments (including
non-governmental assessments for common charges under a restrictive
covenant or other private agreement that are not treated as part of
Operating Costs) now or hereafter attributable to the Project (or
its operation), excluding, however, penalties and interest thereon
and federal and state taxes on income (if the present method of
taxation changes so that in lieu of or in addition to the whole or
any part of any Taxes, there is levied on Landlord a capital tax
directly on the rents received therefrom or a franchise tax,
assessment, or charge based, in whole or in part, upon such rents
for the Project, then all such taxes, assessments, or charges, or
the part thereof so based, shall be deemed to be included within
the term “Taxes” for purposes hereof). Taxes
shall include the reasonable actual costs of consultants retained
in an effort to lower taxes and all costs incurred in disputing any
taxes or in seeking to lower the tax valuation of the Project.
For property tax purposes, Tenant waives all rights to
protest or appeal the appraised value of the Premises, as well as
the Project, and all rights to receive notices of
reappraisement.
(3)
By April 1 of each calendar
year, or as soon thereafter as practicable, Landlord shall furnish
to Tenant a statement of Operating Costs for the previous year, in
each case adjusted as provided in Section 4(b)(4), and of the
Taxes for the previous year (the “ Operating Costs and
Tax Statement ” ). If Tenant’s estimated
payments of Operating Costs or Taxes under this
Section 4(b) for the year covered by the Operating Costs
and Tax Statement exceed Tenant’s Proportionate Share of such
items as indicated in the Operating Costs and Tax Statement, then
Landlord shall promptly credit or reimburse Tenant for such excess;
likewise, if Tenant’s estimated payments of Operating Costs
or Taxes under this Section 4(b) for such year are less
than Tenant’s Proportionate Share of such items as indicated
in the Operating Costs and Tax Statement, then Tenant shall
promptly pay Landlord such deficiency. Notwithstanding the
foregoing, in the event that Landlord fails to deliver to Tenant
such Operating Costs and Tax Statement on or before
December 31 of the following year with respect to Operating
Costs and
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Taxes actually billed to Landlord
during the previous year, Landlord shall waive its right to collect
any such deficiency in the payment of such Operating Costs and
Taxes.
(4)
With respect to any calendar year or
partial calendar year in which the Building is not occupied to the
extent of 100% of the rentable area thereof, the Operating Costs
for such period which vary with the occupancy of the Building
shall, for the purposes hereof, be increased to the amount which
would have been incurred had the Building been occupied to the
extent of 100% of the rentable area thereof.
(5)
Provided no Event of Default then
exists, after receiving an annual Operating Costs and Tax Statement
and giving Landlord 30 days’ prior written notice thereof,
Tenant may inspect Landlord’s records relating to Operating
Costs and Taxes for the period of time covered by such Operating
Costs and Tax Statement in accordance with the following
provisions. If Tenant fails to object to the calculation of
Operating Costs and Taxes on an annual Operating Costs and Tax
Statement within 90 days after the statement has been delivered to
Tenant, or if Tenant fails to conclude its inspection within 180
days after the statement has been delivered to Tenant, then Tenant
shall have waived its right to object to the calculation of
Operating Costs and Taxes for the year in question and the
calculation of Operating Costs and Taxes set forth on such
statement shall be final. Tenant’s inspection shall be
conducted where Landlord maintains its books and records (which
shall be in Southern California), shall not unreasonably interfere
with the conduct of Landlord’s business, and shall be
conducted only during business hours reasonably designated by
Landlord. Landlord will reasonably cooperate, consistent with
customary real estate industry practices for institutional
landlords, with Tenant’s conduct of such audit. Tenant
shall pay the cost of such inspection, unless the total Operating
Costs and Taxes for the period in question is determined to be
overstated by more than 4% in the aggregate, in which case Landlord
shall pay the inspection cost (not to exceed the amount Tenant was
overcharged for the period in question). Tenant may not
conduct an inspection more than once during any calendar year.
Unless Landlord disputes the results of such inspection, if
such inspection reveals that an error was made in the Operating
Costs or Taxes previously charged to Tenant, then Landlord shall
refund to Tenant any overpayment of any such costs, or Tenant shall
pay to Landlord any underpayment of any such costs, as the case may
be, within 30 days after notification thereof. If Landlord
disputes the results of such inspection, such dispute shall be
submitted to expedited, binding arbitration in accordance with the
rules of the American Arbitration Association. Tenant
shall maintain the results of each such inspection confidential and
shall not be permitted to use any third party to perform such
inspections, other than an independent firm of certified public
accountants (1) reasonably acceptable to Landlord, (2) which
is not compensated on a contingency fee basis or in any other
manner which is dependent upon the results of such inspection (and
Tenant shall deliver the fee agreement or other similar evidence of
such fee arrangement to Landlord upon request), and (3) which
agrees with Landlord in writing to maintain the results of such
inspection confidential. Nothing in this Section 4(b)(5)
shall be construed to limit, suspend or abate Tenant’s
obligation to pay Rent when due, including Additional
Rent.
5.
Delinquent Payment; Handling
Charges .
All past due
payments required of Landlord or Tenant hereunder shall bear
interest from the date due until paid at the lesser of ten percent
per annum or the maximum lawful rate of interest (such lesser
amount is referred to herein as the “ Default Rate
” ); additionally, Landlord, in addition to all other
rights and remedies available to it, may charge Tenant a fee equal
to five percent of the delinquent payment to reimburse Landlord for
its cost and inconvenience incurred as a consequence of
Tenant’s delinquency. In no event, however, shall the
charges permitted under this Section 5 or elsewhere in this
Lease, to the extent they are considered to be interest under
applicable Law, exceed the maximum lawful rate of interest.
Notwithstanding the foregoing, the late fee referenced above
shall not be charged with respect to the first two occurrences (but
not any subsequent occurrence) during any 12-month period that
Tenant fails to make payment when due, until five days after
Landlord delivers written notice of such delinquency to
Tenant.
6.
Intentionally Omitted
.
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7.
Landlord’s Obligations
.
(a)
Landlord’s Maintenance
Obligations .
Subject to the
provisions of Section 4(b), Landlord’s maintenance
obligations are limited to the repair and replacement of the
Building’s Structure, the Building’s Systems, including
the three (3) one hundred twenty ton HVAC units on the roof of
the Building, and maintenance and repair of the common areas of the
Project (including parking areas and landscaping) and Landlord
shall keep the Building’s Structure and common areas of the
Project in good order and repair. Landlord shall not be
responsible for (1) any such work until Tenant notifies
Landlord of the need therefor in writing or (2) alterations to
the Building’s Structure required by applicable law as a
result of the nature of Tenant’s use of the Premises (which
alterations shall be Tenant’s responsibility). Further,
at such time as Landlord determines that replacement of the
Building roof is required, Landlord shall replace the roof at
Landlord’s sole cost. Such roof replacement shall be
coordinated with Tenant so as to minimize any disturbance of
Tenant’s operations in the Building. The
Building’s Structure does not include skylights, windows,
glass or plate glass, doors, special fronts, or office entries, all
of which shall be maintained by Tenant. Subject to the
provisions of Section 4(b), Landlord’s liability for any
defects, repairs, replacement or maintenance for which Landlord is
specifically responsible for under this Lease shall be limited to
the cost of performing the work. Further, within twelve (12)
months following the Commencement Date, Landlord shall, at its sole
cost, slurry seal and restripe the parking area of the Project and
install a handrail along the exterior ramp at the west side of the
Building. Additionally, Landlord shall repair the defective
leveling material on the second floor of the Premises in accordance
with Section 12 of Exhibit D attached
hereto. Notwithstanding anything to the contrary contained in
this Lease, Landlord shall have no obligations with respect to the
maintenance, repair or replacement of Tenant’s Off-Premises
Equipment, the Generator Space or the six (6) twenty ton HVAC
units on the roof of the Building, which shall be the sole
responsibility of Tenant.
(b)
Landlord’s Right to Perform
Tenant’s Obligations . Landlord may perform Tenant’s maintenance,
repair, and replacement obligations and any other items that are
Tenant’s obligation pursuant to Section 8 if Tenant
fails to do so after 30 days’ written notice to Tenant.
Tenant shall reimburse Landlord for the cost incurred in so doing
within 30 days after being invoiced therefor.
(c)
Tenant’s Right to Perform
Landlord’s Obligations . Tenant may perform Landlord’s maintenance,
repair, and replacement obligations and any other items that are
Landlord’s obligation pursuant to this Section 7 if
(1) Landlord fails to commence the performance of such
obligations within thirty (30) days’ following written notice
from Tenant to Landlord, which notice shall set forth in reasonable
detail the obligations which Landlord has failed to perform, and
(2) Tenant thereafter again notifies Landlord of
Landlord’s failure to perform, which notice shall indicate
that Tenant shall perform such obligations if Landlord fails to
commence the performance of such obligations within 5 business days
following Tenant’s second notice. Any such work by
Tenant shall be performed in accordance with the requirements of
Section 8(c) of this Lease. Landlord shall
reimburse Tenant for the reasonable costs incurred in performing
such work within thirty (30) days after receipt of a payment demand
from Tenant, which demand shall include reasonably detailed
documentation of such costs. If Landlord does not pay such
amount within thirty (30) days after such payment demand, the
amount owed shall bear interest at the Default Rate and,
alternatively, Tenant may deduct such amounts owed from the Basic
Rent next due under this Lease until such amounts owed are paid in
full; provided, however, that such deductions shall not at any time
be more than twenty percent (20%) of the total monthly Basic Rent
then due hereunder during any month; provided, further, that such
offset right shall not be applicable and Tenant shall have no right
to deduct any amount from Basic Rent unless the amount owed by
Landlord to Tenant for any individual obligation of Landlord so
performed by Tenant exceeds Fifty Thousand Dollars
($50,000.00). Notwithstanding the foregoing, if Landlord
disputes the amounts claimed due by Tenant, such dispute shall be
submitted to expedited, binding arbitration in accordance with the
rules of the American Arbitration Association, and the
prevailing party shall be entitled to the benefit of
Section 25(t) of this Lease.
8.
Improvements; Alterations; Repairs;
Maintenance .
(a)
Improvements;
Alterations . Improvements to the Premises shall be
installed at Tenant’s expense only in accordance with plans
and specifications which have been previously submitted to and
approved in writing by Landlord, which approval shall be governed
by the provisions set forth in this Section 8(a). No
alterations or physical additions in or to the Premises may be made
without Landlord’s prior written consent, which shall not be
unreasonably withheld or delayed; however, Landlord may withhold
its consent to any alteration
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or addition that would adversely
affect (in the reasonable discretion of Landlord) the
(1) Building’s Structure or the Building’s Systems
(including the Building’s restrooms or mechanical rooms), or
(2) exterior appearance of the Building. Tenant shall
not paint or install lighting or decorations, signs, window or door
lettering, or advertising media of any type visible from the
exterior of the Premises without the prior written consent of
Landlord, which consent shall not be unreasonably withheld and
which installation shall be subject to Tenant obtaining approval of
all applicable governmental authorities and compliance with any
covenants, conditions and restrictions affecting the Project.
All alterations, additions, and improvements shall be
constructed, maintained, and used by Tenant, at its risk and
expense, in accordance with all Laws; Landlord’s consent to
or approval of any alterations, additions or improvements (or the
plans therefor) shall not constitute a representation or warranty
by Landlord, nor Landlord’s acceptance, that the same comply
with sound architectural and/or engineering practices or with all
applicable Laws, and Tenant shall be solely responsible for
ensuring all such compliance. Notwithstanding the foregoing,
Landlord’s consent shall not be required for improvements if
(i) such improvements do not adversely affect the
Building’s Structure or the Building’s Systems,
(ii) are not visible from the exterior of the Premises,
(iii) the cost of such improvements does not exceed $50,000.00
in the aggregate; and (iv) Tenant provides Landlord at least
10 days’ prior written notice of its intent to make such
improvements together with plans and specifications for the same.
All improvements shall comply with Laws and shall be made in
good, workmanlike and lien-free manner. If (a) Landlord
shall fail to grant or withhold its consent to improvements
requiring the consent of Landlord within 15 business days following
Tenant’s written request for consent, (b) Tenant
thereafter again requests in writing Landlord’s consent of
the proposed improvements which request shall indicate that
Landlord’s consent shall be deemed granted if Landlord fails
to respond, and (c) Landlord fails to notify Tenant in writing
of Landlord’s granting or withholding of consent to the
proposed improvements within five (5) business days following
Tenant’s second request, Landlord’s consent shall be
deemed granted. Landlord shall specify in reasonable detail
the basis for the withholding of its consent to any proposed
improvements. With respect to any proposed improvements,
Tenant may, concurrently with Tenant’s request for approval
or Tenant’s notice to Landlord of Tenant’s intent to
make such improvements, request that Landlord notify Tenant if such
improvements are to be removed by Tenant at the expiration or
earlier termination of this Lease. Tenant’s notice to
Landlord shall indicate that Landlord’s failure to notify
Tenant within fifteen (15) business days following Tenant’s
request as to whether such improvements are to be so removed shall
be deemed Landlord’s agreement that such improvements need
not be so removed, and if Landlord fails to so notify Tenant within
said fifteen (15) business day period, Landlord shall be deemed to
have agreed that such improvements need not be so
removed.
(b)
Repairs; Maintenance
. Subject to Landlord’s obligations under
Section 7(a) above, Tenant shall maintain the Premises in
a clean, safe, and operable condition, and shall not permit or
allow to remain any waste or damage to any portion of the Premises.
Additionally, Tenant, at its sole expense, shall repair,
replace and maintain in good condition and in accordance with all
Laws and the equipment manufacturer’s suggested service
programs, all portions of the Premises, Tenant’s Off-Premises
Equipment, the Generator Space and all areas, improvements and
systems exclusively serving the Premises. Tenant shall repair
or replace, subject to Landlord’s direction and supervision,
any damage to the Building caused by a Tenant Party. If
Tenant fails to make such repairs or replacements within 15 days
after written notice from Landlord specifying such repair or
replacement in reasonable detail, then Landlord may make the same
at Tenant’s cost. If any such damage occurs outside of
the Premises, then Landlord may elect to repair such damage at
Tenant’s expense, rather than having Tenant repair such
damage. The reasonable, actual cost of all maintenance,
repair or replacement work performed by Landlord under this
Section 8 shall be paid by Tenant to Landlord within 30 days
after Landlord has invoiced Tenant therefor. Except as
otherwise expressly provided in this Lease, Tenant hereby waives
and releases its right to make repairs at Landlord’s expense
under Sections 1941 and 1942 of the California Civil Code or under
any similar law, statute or ordinance now or hereafter in
effect.
(c)
Performance of Work
. All work described in this Section 8 shall
be performed only by Landlord or by contractors and subcontractors
reasonably approved in writing by Landlord. Tenant shall
cause all contractors and subcontractors to procure and maintain
insurance coverage naming Landlord, Landlord’s property
management company and Landlord’s asset management company as
additional insureds against such risks, in such amounts, and with
such companies as Landlord may reasonably require. Landlord
may post on and about the Premises notices of non-responsibility
pursuant to applicable Laws with respect to such work. All
such work shall be performed in accordance with all Laws and in a
good and workmanlike manner so as not to damage the Building
(including the Building’s Structure and the Building’s
Systems). All such work which may affect the Building’s
Structure or the Building’s Systems must be approved by the
Building’s engineer of record, at Tenant’s expense
and,
7
at Landlord’s election, must
be performed by a licensed contractor mutually acceptable to
Landlord and Tenant. All work affecting the roof of the
Building must be performed by a licensed roofing contractor
mutually acceptable to Landlord and Tenant and no such work will be
permitted if it would void or reduce the warranty on the
roof.
(d)
Mechanic’s Liens
. All work performed, materials furnished, or
obligations incurred by or at the request of a Tenant Party shall
be deemed authorized and ordered by Tenant only, and Tenant shall
not permit any mechanic’s liens to be filed against the
Premises or the Project in connection therewith. Upon
completion of any such work, Tenant shall deliver to Landlord final
lien waivers from all contractors, subcontractors and materialmen
who performed such work. If such a lien is filed, then Tenant
shall, within thirty days after Landlord has delivered notice of
the filing thereof to Tenant (or such earlier time period as may be
necessary to prevent the forfeiture of the Premises, the Project or
any interest of Landlord therein or the imposition of a civil or
criminal fine with respect thereto), either (1) pay the amount
of the lien and cause the lien to be released of record, or
(2) diligently contest such lien and deliver to Landlord a
bond or other security reasonably satisfactory to Landlord.
If Tenant fails to timely take either such action, then
Landlord may pay the lien claim, and any amounts so paid, including
expenses and interest, shall be paid by Tenant to Landlord within
ten days after Landlord has invoiced Tenant therefor.
Landlord and Tenant acknowledge and agree that their
relationship is and shall be solely that of
“landlord-tenant” (thereby excluding a relationship of
“owner-contractor,” “owner-agent” or other
similar relationships). Accordingly, all materialmen,
contractors, artisans, mechanics, laborers and any other persons
now or hereafter contracting with Tenant, any contractor or
subcontractor of Tenant or any other Tenant Party for the
furnishing of any labor, services, materials, supplies or equipment
with respect to any portion of the Premises, at any time from the
date hereof until the end of the Term, are hereby charged with
notice that they look exclusively to Tenant to obtain payment for
same. Landlord may record, at its election, notices of
non-responsibility pursuant to California Civil Code
Section 3094 in connection with any work performed by
Tenant. Nothing herein shall be deemed a consent by Landlord
to any liens being placed upon the Premises, the Project or
Landlord’s interest therein due to any work performed by or
for Tenant or deemed to give any contractor or subcontractor or
materialman any right or interest in any funds held by Landlord to
reimburse Tenant for any portion of the cost of such work.
Tenant shall defend, indemnify and hold harmless Landlord and
its agents and representatives from and against all claims,
demands, causes of action, suits, judgments, damages and expenses
(including attorneys’ fees) in any way arising from or
relating to the failure by any Tenant Party to pay for any work
performed or materials furnished. This indemnity provision
shall survive termination or expiration of this Lease.
(e)
Janitorial Services
. Tenant, at its sole expense, shall provide its
own janitorial services to the Premises and shall maintain the
Premises in a clean and safe condition. Tenant shall store
all trash and garbage within the area and in receptacles designated
from time to time by Landlord and shall, at its sole expense,
arrange for the regular pickup of such trash and garbage at times,
and pursuant to reasonable regulations, established by Landlord
from time to time. If Tenant fails to provide janitorial
services to the Premises or trash removal services in compliance
with the foregoing, Landlord, in addition to any other rights and
remedies available to it, may provide such services, and Tenant
shall pay to Landlord the cost thereof within thirty days after
Landlord delivers to Tenant an invoice therefor.
(f)
Utilities . Tenant shall provide and pay for all water, gas,
electricity, heat, telephone, sewer, and other utilities and
services used at the Project, together with all taxes, penalties,
surcharges, and maintenance charges pertaining thereto.
Landlord shall not be liable for any interruption or failure
of utility service to the Premises, and in no event shall the
unavailability of such services or any other services (or any
diminution in the quality thereof) render Landlord liable to Tenant
or any entity claiming through Tenant for any damages caused
thereby, constitute a constructive eviction of Tenant, constitute a
breach of any implied warranty by Landlord, or entitle Tenant to
any abatement of Tenant’s obligations hereunder. Tenant
shall not install any electrical equipment requiring voltage in
excess of Building capacity. The use of electricity in the
Premises shall not exceed the capacity of existing feeders and
risers to or wiring in the Premises. Any risers or wiring
required to meet Tenant’s electrical requirements shall, upon
Tenant’s written request, be installed by Landlord, at
Tenant’s cost, if, in Landlord’s reasonable judgment,
the same shall not cause permanent damage to the Building, cause or
create a dangerous or hazardous condition, or entail excessive or
unreasonable alterations, repairs, or expenses. Tenant shall
not use machines or equipment in the Premises which overload any
utility.
(g)
Security Services . Tenant acknowledges that the Rent payable to
Landlord hereunder does not include the cost of guard service or
other security measures, and that Landlord shall have no
obligation
8
whatsoever to provide any such
service or measures. Tenant assumes all responsibility for
the protection of Tenant, its agents and invitees.
9.
Use . Tenant shall occupy and use the Premises
only for the Permitted Use and shall comply with all Laws relating
to the use, condition, access to, and occupancy of the Premises and
will not commit waste, overload the Building’s Structure or
the Building’s Systems or subject the Premises to use that
would damage the Premises. The Premises shall not be used for
any use which is disreputable, creates extraordinary fire hazards,
or results in an increased rate of insurance on the Building or its
contents, or for the storage of any Hazardous Materials except in a
manner and quantity necessary for the ordinary performance of
Tenant’s business and then only in compliance with all Laws.
In no event shall the Generator Space be used for human
occupancy other than entry for service or maintenance thereof.
If, because of a Tenant Party’s acts or because Tenant
vacates the Premises, the rate of insurance on the Building or its
contents increases, then Tenant shall pay to Landlord the amount of
such increase on demand, and acceptance of such payment shall not
waive any of Landlord’s other rights. If Tenant vacates
the Premises, Tenant shall, at its sole cost and expense, provide
reasonable security for the Project and shall be responsible for
any additional costs incurred by Landlord in connection with such
vacation by Tenant. Tenant shall conduct its business and
control each other Tenant Party so as not to create any nuisance.
Except as the result of an emergency, a requirement by Law,
or a specific provision set forth in this Lease, Tenant and Tenant
Parties shall have access to the Building twenty-four (24) hours
per day, seven (7) days per week during the Term.
10.
Assignment and Subletting
.
(a)
Transfers . Except as provided in Section 10(h), Tenant
shall not, without the prior written consent of Landlord,
(1) assign, transfer, or encumber this Lease or any estate or
interest herein, whether directly or by operation of law,
(2) permit any other entity to become Tenant hereunder by
merger, consolidation, or other reorganization, (3) if Tenant
is an entity other than a corporation whose stock is publicly
traded, permit the transfer of an ownership interest in Tenant so
as to result in a change in the current control of Tenant,
(4) sublet any portion of the Premises, (5) grant any
license, concession, or other right of occupancy of any portion of
the Premises, or (6) permit the use of the Premises by any
parties other than Tenant (any of the events listed in
Section 10(a)(l) through 10(a)(6) being a “
Transfer ” ).
(b)
Consent Standards . Landlord shall not unreasonably withhold,
condition or delay its consent to any assignment or subletting of
the Premises, provided that the proposed transferee (1) is
creditworthy, (2) has a good reputation in the business
community, (3) will use the Premises for general office use or
the Permitted Use and will not use the Premises in any manner that
would conflict with any exclusive use agreement or other similar
agreement entered into by Landlord with any other tenant of the
Complex, (4) will not use the Premises or Project in a manner
that would materially increase the pedestrian or vehicular traffic
to the Premises or Project, (5) is not a governmental entity,
or subdivision or agency thereof, (6) is not another occupant
of the Complex unless Landlord is unable to meet the space
requirements of such occupant in the Complex, and (7) is not a
person or entity with whom Landlord is then, or has been within the
six-month period prior to the time Tenant seeks to enter into such
assignment or subletting, negotiating to lease space in the Complex
or any Affiliate of any such person or entity unless Landlord is
unable to meet the space requirements of such person or entity in
the Complex; otherwise, Landlord may withhold its consent in its
sole discretion. Additionally, Landlord may withhold its
consent in its sole discretion to any proposed Transfer if any
Event of Default by Tenant then exists.
(c)
Request for Consent
. If Tenant requests Landlord’s consent to a
Transfer, then, at least 15 business days prior to the effective
date of the proposed Transfer, Tenant shall provide Landlord with a
written description of all terms and conditions of the proposed
Transfer, copies of the proposed documentation, and the following
information about the proposed transferee: name and address;
reasonably satisfactory information about its business and business
history; its proposed use of the Premises; banking, financial, and
other credit information; and general references sufficient to
enable Landlord to determine the proposed transferee’s
creditworthiness and character. Concurrently with
Tenant’s notice of any request for consent to a Transfer,
Tenant shall pay to Landlord a fee of $500 to defray
Landlord’s expenses in reviewing such request, and Tenant
shall also reimburse Landlord immediately upon request for its
reasonable attorneys’ fees incurred in connection with
considering any request for consent to a Transfer, provided
however, if no extensive negotiation is required in connection with
such proposed Transfer, the maximum amount that Tenant shall be
required to reimburse Landlord shall not exceed $2,000.
9
(d)
Conditions to Consent
. If Landlord consents to a proposed Transfer,
then the proposed transferee shall deliver to Landlord a written
agreement whereby it expressly assumes Tenant’s obligations
hereunder; however, any transferee of less than all of the space in
the Premises shall be liable only for obligations under this Lease
that are properly allocable to the space subject to the Transfer
for the period of the Transfer. No Transfer shall release
Tenant from its obligations under this Lease, but rather Tenant and
its transferee shall be jointly and severally liable therefor.
Landlord’s consent to any Transfer shall not waive
Landlord’s rights as to any subsequent Transfers. If an
Event of Default occurs while the Premises or any part thereof are
subject to a Transfer, then Landlord, in addition to its other
remedies, may collect directly from such transferee all rents
becoming due to Tenant and apply such rents against Rent.
Tenant authorizes its transferees to make payments of rent directly
to Landlord upon receipt of notice from Landlord to do so following
the occurrence of an Event of Default hereunder. Tenant shall
be responsible for the cost of any demising walls or other
improvements necessitated by a proposed subletting or
assignment.
(e)
Attornment by Subtenants
. Each sublease by Tenant hereunder shall be
subject and subordinate to this Lease and to the matters to which
this Lease is or shall be subordinate, and each subtenant by
entering into a sublease is deemed to have agreed that in the event
of termination, re-entry or dispossession by Landlord under this
Lease, Landlord may, at its option, take over all of the right,
title and interest of Tenant, as sublandlord, under such sublease,
and such subtenant shall, at Landlord’s option, attorn to
Landlord pursuant to the then executory provisions of such
sublease, except that Landlord shall not be (1) liable for any
previous act or omission of Tenant under such sublease,
(2) subject to any counterclaim, offset or defense that such
subtenant might have against Tenant, (3) bound by any previous
modification of such sublease not approved by Lan